It takes time to raise your credit score, especially if you’re looking for significant improvement. Though a car loan won’t better your credit overnight, it helps to improve your credit by adding to three factors of it.

The Rise and Fall of Credit

How Fast will a Car Loan Raise my Credit Score?Credit is something all of us typically use nearly every day. Your credit is made up of what’s contained in your credit reports, which serve as a basis for your credit score. Credit reports are a record of how you’ve handled credit in the past, and how you’re currently using it. Your credit score is a number between 300 and 850 on the FICO scale, which is the most commonly used credit scoring model used by auto lenders.

There are five factors that make up your credit score, each accounting for a certain percentage of it. Depending on how these factors add up, your credit score can rise and fall as your credit situation changes.

Building Positive Payment History

The biggest piece of the pie is payment history, making up 35 percent of your credit score. When you take out an auto loan, especially a bad credit car loan, you gain the opportunity to make a positive impact on your credit by making all your monthly payments on time and in full. The best way to make sure you get the most impact in this area is to pay all your monthly bills on time and in full, not just your car note.

Adding Diversity to Your Credit

Though your credit mix only makes up 10 percent of your credit score, having different types of credit accounts still helps more than it hurts. Having installment loans, like auto loans and mortgages, and revolving credit, such as credit cards and store credit, gives your credit profile a boost. If you’ve only used credit cards, adding a car loan will give your credit the diversity it was lacking.


When a lender looks at your credit in response to a request from you, it counts as a hard inquiry. Having too many of these at once can be a red flag for lenders. At the same time, having the occasional inquiry can be a healthy sign that you’re using your credit.

Slow and Steady Wins the Race

It won’t be a quick race to the top when you use a car loan to improve your credit, but because an auto loan is such a large financial commitment, it can be one of the best credit improvement tools around. If bad credit is standing in your way and you need a car, you can count on Auto Credit Express to be in your corner.

We work with a nationwide network of special finance car dealers that have the lending resources available to help people who are struggling with bad credit, no credit, or even bankruptcy. So, don’t delay, fill out our easy online auto loan request form to get the process of finding a local dealer started today!